Illinois Teachers’ co-invests with Stone Point

The $37bn retirement system launched its co-investment programme last year as part of a private equity portfolio shake-up, which included plans to sell older investments and increase its exposure to international funds and secondaries.

The Teachers’ Retirement System of the State of Illinois has completed what appears to be its first recent co-investment, committing up to $40 million to invest alongside Stone Point Capital in middle market finance company NXT Capital, according to documents released by the $37 billion retirement system.

Illinois Teachers’ investment committee approved the co-investment, which was made with funds from Stone Point Capital Trident Fund V, at its August meeting, according to retirement system documents. A total of $318 million was raised for the company, NXT said in a statement. The total included a $125 million follow-on investment from Teachers’ Private Capital, the private investment unit of the Ontario Teachers’ Pension Plan.

Stone Point closed its fifth Trident Fund last year on $3.5 billion, including a $75 million commitment from Illinois Teachers’. A spokesperson for the retirement system did not return a request for comment.

Illinois Teachers’ launched its co-investment programme last year as part of an overhaul of its private equity portfolio, which included plans to sell older investments as well as ramp up exposure to international funds and secondaries. The retirement system announced that Houlihan Lokey, LP Capital Advisors and Pacific Corporate Group Asset Management would advise its co-investment program in October, 2010. PCG is also Illinois Teachers’ private equity consultant.

Investment committee and board meeting minutes do not indicate that the retirement system made any co-investments since the announcing the programme, though that could not be confirmed by the Illinois Teachers’ at press time.

The retirement system increased its allocation to private equity in June, when the board approved a 12-month tactical investment plan that would hike its allocation to private equity by 1.9 percent of total assets. The pension fund will make between $900 million and $1.4 billion in private equity commitments over each of the next five years. Illinois Teachers’ had a 9.7 percent allocation to private equity as of 30 June.